NEW YORK – Meridian Bioscience reported on Friday that its fiscal first quarter revenues decreased 8 percent year over year partially due to lower contract pricing for certain gastrointestinal products.
For the three months ended Dec. 31, 2019 the firm reported revenues of $47.4 million, down from $51.5 million a year ago. Meridian missed the average Wall Street estimate of $48.7 million.
Meridian reported Q1 diagnostics revenues of $34.8 million, down 5 percent year over year from $36.7 million, though the company noted that this is its fourth consecutive quarter with diagnostics revenues above $33 million, "signaling continued stabilization of this business."
Within diagnostics, the firm reported molecular assays revenues of $6.9 million, down 5 percent year over year from $7.2 million, and immunoassays and blood chemistry assays revenues of $27.9 million, down 6 percent year over year from $29.4 million.
CEO Jack Kenny said in a statement that the company's Revogene molecular system installations reached 114 at the end of the quarter, and new product developments on the Revogene, Curian, and PediaStat diagnostics platforms are progressing. This year, the company said it expects to produce 20 Revogene instruments per month. After the acquisition of GenePOC and its Quebec facility, Meridian hopes to ramp up production of Revogene instruments to 500 or more each year, Kenny said on a conference call to discuss the earnings results.
Last year's GenePOC acquisition signaled a revamp of Meridian's diagnostic business, as the company continues to convert customers using its old Alethia instrument to the Revogene, which Kenny called "a critical focus." He also said more customers than expected were moving additional assays to the Revogene system when converting. Around 15 percent of the business contracted on the Revogene was new business for Meridian, a combination of new customers and customers converting from the Alethia who committed to adding new assays.
Sales of respiratory illness diagnostics products were affected by lower volumes of flu shipments, he also said. Because the 2018 to 2019 flu season was particularly intense, customers increased their orders a year ago, resulting in fewer orders in the current season, Kenny said.
He further noted the company is working to get its gastrointestinal panel for the Revogene system approved by the US Food and Drug Administration later this year.
Investment in diagnostics is a key part of Meridian's goals to stabilize the business, with Kenny saying the company anticipates its diagnostics R&D spending to reach up to 19 percent of the total diagnostic revenue. Many of the new products Kenny discussed, including a C. difficile test for the company's Curian instrument, are expected to launch in 2021 and beyond. With the investment in R&D and eventual new products, Kenny said Meridian will "start to look like a different diagnostics company."
Q1 revenues for the firm's life sciences segment were $12.6 million, down 15 percent year over year from $14.8 million. Meridian said lower ordering patterns of its top in vitro diagnostics manufacturing customers led to the lower revenues, but it expects life science revenues to rebound during the year. The light order patterns were a coincidence, with two or three major customers going through particularly light ordering quarters, Kenny said. The company doesn't expect continued lightness throughout the rest of the year, he said.
Revenue from sales into China increased 70 percent from Q1 2019, and last month the company began shipping molecular reagents to China to help with the coronavirus outbreak, Meridian noted. Kenny noted the company wasn't entirely clear on the financial implications of the coronavirus outbreak and testing on Meridian, but it didn't see it changing their financial guidance for the rest of 2020. "It's a positive for us but not a life-changing type of positive situation," Kenny said.
However, he emphasized that reagents are a key component of other molecular tests, so contact with customers in China creates an opportunity for Meridian to sell its reagents to those companies for use in other molecular tests in the future and open further business in China.
The company reported Q1 net earnings of $2.8 million, or $.07 per share, compared to $8.1 million, or $.19 per share in Q1 2019. Adjusted EPS was $.10, beating the consensus Wall Street estimate of $.06 per share.
In Q1, the firm’s R&D costs rose 20 percent to $4.8 million from $4 million in Q1 2019, and its SG&A costs fell 7 percent to $15.4 million from $16.5 million.
Meridian had $68.6 million in cash and cash equivalents as of Dec. 31, 2019.
The Cincinnati-based firm reaffirmed the FY 2020 guidance it set in Q4 2019. The company expects revenues to stay flat or decrease by up to 3 percent and adjusted EPS in the range of $.28 to $.34.